1) The most common argument for income redistribution is that

A) it works- it reduces the poverty rate

B) it provides more incentive for people to try to better themselves

C) a society as wealthy as the US has a moral obligation to provide its members with the basic necessities of life

D) it improves the efficiency in the economy

2) Specialization and trade allows a country to

A) produce and consume on its production possibility frontier

B) produce and consume outside its production possiblity frontier

C) produce on its production possiblity frontier and consume outside of it

D) produce and consume inside its production possiblity frontier

3) The federal debt is the

A) same as the federal deficit.

B) total amount owed to the public by the federal government.

C) amount towed to the federal government by other countries.

D) yearly federal tax revenues minus the yearly federal expenses.

4) Transfer payments are the ________ in the government's budget.

A) smallest expenditure source

B) largest expenditure source

C) smallest revenue source

D) largest revenue source

6)A government's debt is increased when it

A) balances is budget.

B) buys more bonds.

C) runs a deficit.

D) runs a surplus.

6) A budget is

A) a record of income and purchases from the previous year.

B) plan for spending and earning money.

C) only necessary for individuals with low incomes.

D) only necessary for countries suffering from financial crises.

E) required to be balanced by Congress.

7) Should average citizens be concerned with the government's budget?

A) No, because the government's spending and tax policies do not affect citizens.

B) No, because even if citizens do not like the budget, there is nothing they can do to influence it.

C) No, because the government is not spending the average citizen's money; therefore, the average citizen has no incentive to monitor the government's budget.

D) Yes, because an important part of voting is deciding on what tax and spending plans endorsed by the various candidates make the most sense to you.

E) Yes, because the government's yearly budget decisions have immediate and future implications for levels of taxation and the provision of public goods.

8) Transfer payments refer to funds that are transferred from one group in society to another group,

A) so these payments have no impact on the government budget deficit.

B) so these payments have no impact on the government debt.

C) so these payments are unfair to those who lose money in the transfer.

D) and these payments represent a growing share of U.S. federal outlays.

E) and these payments remain approximately constant over time.

9) The United States has a ________ income tax system.

A)Progressive

B)regressive

C) marginal

D) good

E) bad

10) A progressive income tax system is one in which

A) income tax rates decrease as earned income increases.

B) everyone pays the same tax rate, so that wealthier people pay a larger sum of taxes.

C) everyone pays the same tax rate, so that people with low incomes pay a smaller sum

of taxes.

D) income tax rates increase as earned income increases.

E) income taxes are based on occupation.

11) Why do wealthy citizens contribute much higher tax revenues to the government than poor citizens?

A) Wealthy citizens consume more government services, so they are taxed at a higher rate.

B) Wealthy citizens have a much lower average tax rate than poor citizens.

C) Wealthy citizens work more hours per week than poor citizens.

D)Wealthy citizens have much more taxable income than poor citizens.

E) Wealthy citizens do not contribute more tax revenues to the government than poor citizens.

12) A U.S. federal government budget deficit occurs when

A) government revenue exceeds outlays.

B) government outlays exceed revenue.

C) government outlays equal revenue.

D) the United States borrows money from foreign countries.

E) the United States lends money to foreign countries.

13) Should we be concerned about a growing federal debt?

A) No, because budget deficits are more important to worry about than the federal debt.

B) No, because federal debt, unlike private debt, does not have to be repaid.

C) Yes, because a large federal debt may slow the rate of economic growth in the future.

D) Yes, because if the debt grows too large, we will have to receive bailouts from other countries, which means they will be able to control our policy and economy.

E) Yes, because it is likely that the government will confiscate the savings of individuals to pay for the debt.

14) According to the principle of comparative advantage, trade between two countries will benefit

A) neither country.

B) the country with lower production costs.

C) the country with higher production costs.

D) both countries.

E) all workers.

15) A tax on imports is known as a(n)

A) import subsidy.

B) nontariff trade barrier.

C) tariff.

D) voluntary quota.

E) quota.

16) Limits on the quantity or total value of specific products imported to a nation are

A) import quotas.

B) protective tariffs.

C) nontariff barriers.

D) export subsidies.

E) export quotas.

17) One of the reasons given for the imposition of a protectionist policy such as a tariff is to

A) aid other nations in developing their own industries.

B) increase the welfare of foreign consumers.

C) increase the welfare of domestic consumers.

D) protect domestic workers from foreign competition.

E) low domestic production.